"A crucial problem with this policy is that the Maori and community housing provider sector, particularly here in the North, currently lacks the capacity to buy and administer a significant number of state houses," Mr Howard said.
The "broad brush" sales policy created no new houses, did not address how iwi and hapu could buy the houses, would force social housing providers into competition with each other and did not guarantee effective government financial or practical support for the sector.
"For a range of reasons, this reckless proposal seems to us to be unsustainable, and may even be set up to fail. Then it would provide a window for a substantial sell-off of state houses to the private sector," Mr Howard said.
The move to sell 71 local houses also drew criticism from Labour's Tai Tokerau MP Kelvin Davis, who said it would worsen poor family health, stress, financial problems and domestic violence issues. Mr Davis said his office was inundated with families who had been told there were no state houses available.
Housing NZ acting Northland regional manager Stephen Tipa said the 71 houses did not indicate properties for sale but rather projected movements in stock numbers over the next three years based on predicted demand.